Direct Debit timings

Unlike card transactions, Direct Debit is not an instant payment method. Payments take at least 3 working days to clear, and in most cases advance notice must be given to the payer before the payment process can be initiated.

Direct Debit timings

Unlike card transactions, Direct Debit is not an instant payment method. Payments take at least 3 working days to clear, and in most cases advance notice must be given to the payer before the payment process can be initiated.

This guide details the timings for Direct Debit, and how you can optimise
them.

Advance notice

Except for the cases below, you must notify your customer before submitting a
payment to be collected by Direct Debit. By default, the amount of advance
notice required is 10 working days, although this can be reduced through
agreements with your customer and with your bank.

Notable exceptions to this rule are:

Explicitly authorised payments, where a customer authorises a specific
payment to be taken immediately. This authorisation can only apply to a single
payment at a time.

Fixed payment schedules, where a customer has already been notified of
the date and amount of each payment (for example, they were informed that £10
would be collected from them on the 1st of every month).

Timings after payment submission

Once submitted to the banks, Direct Debit payments are processed using the Bacs
three day cycle. Because of the specifics of how Direct Debit works they can
only be considered successful if no failure report is received several days
later.

Full details of the optimised collection time is provided below, but in
summary:

If a Direct Debit mandate is
already in place, payment is collected 2 working days after submission, can be
considered 99% confirmed 3 working days after submission, and 100% confirmed
after 4 working days.

If a Direct Debit mandate needs
to be created, payment is collected 4 working days after submission, can be
considered 99% confirmed 5 working days after submission, and 100% confirmed
after 6 working days.

The key to understanding both payment timings is the Bacs three day cycle.

The Bacs three day cycle

All Direct Debit processes operate using the Bacs three day cycle. Designed in
the 1970s, the cycle specifies the timescales on which banks must respond to
input from each other.

Working day 0 (submission): A message (e.g., a payment request) is
submitted to Bacs between 7:00am and 10:30pm. Bacs then distribute this
request to the relevant parties overnight.

Working day 1 (processing): Having received the message at 6:00am, the
relevant parties prepare to respond. For example, your customer's bank would
prepare to debit their account.

Working day 2 (action): All parties take the action required. For
example, your customer's bank would debit their account, whilst your bank
would simultaneously credit yours.

The Bacs three day cycle is used for collecting payment by Direct Debit,
setting up new Direct Debit Instructions, and for notifying the merchant of
any payment failures. Chaining several three day cycles together gives the
optimal timeline for collecting a payment by Direct Debit.

Collecting payment against an existing mandate

A single Bacs processing cycle is used to collect a payment against
an existing Direct Debit Instruction. Collection therefore takes two working
days:

However, it is important to understand what happens when a payment fails.
Because of the way Direct Debit works, even payments which have failed will be
credited to your account on day 2. If your customer's bank thinks the payment
should not have happened (if the customer's account was overdrawn, for example)
they will notify your bank to get the payment reversed. Failure notifications
are sent via an additional Bacs three day cycle, and generally the customer's
bank will submit this notification on working day 2 (the day the payment was
due):

However, in around 1% of cases the notification is only submitted the following
day. In this case it is recieved by the merchant's bank 4 workings days after
payment submission:

If a failure notification is received, the payment will be automatically
reversed. As a result, a payment cannot be considered complete until there is no
receipt of failure notification on day 4.

Collecting payment when no mandate exists

If you don't already have a mandate
with your customer, one needs to be set up before payment can be collected.
This adds an additional Bacs processing cycle. Taking into account the 1% of
cases where failure notifications are submitted a day late, collection through
confirmation takes six working days:

As indicated above, payment requests can be submitted as soon as a mandate
has been approved, on day 2. Submitting a payment request before this (for
example on working day 0), is explicitly disallowed by the scheme.

Non-working days and optimising timings

Bacs provide a definitive list of
working days for the Direct Debit system.
Submissions to the banks cannot be made on non-working days, and the banks
themselves will not process any Bacs messages on non-working days.

While the banks may not work on non-working days, it is possible to receive
messages they previously sent you. For example, payment failure reports
distributed overnight on a Friday are available to download on a Saturday
morning.

Payment timings with GoCardless

GoCardless process all Direct Debit payments according to the fully optimised
timetable above. This means that payments will reach your account after 5
working days, or 6 days if no mandate exists.

To find out more about collecting Direct Debits with GoCardless visit
GoCardless.com.

GoCardless (company registration number 07495895) is authorised by the Financial Conduct Authority under the Payment Services Regulations 2009, registration number 597190, for the provision of payment services.

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